GOP candidates don't get Michigan (and manufacturing)
February 25th, 2012
06:30 AM ET

GOP candidates don't get Michigan (and manufacturing)

Editor's Note: Bruce J. Katz is a vice president at the Brookings Institution and founding Director of the Brookings Metropolitan Policy Program. Follow him @bruce_katzJennifer Bradley is a fellow and co-director of the Great Lakes Economic Initiative at the Metropolitan Policy Program.

By Bruce Katz and Jennifer Bradley - Special to CNN

Politics and economic policy are intersecting right now in Michigan, with important lessons for the rest of the country. Against the backdrop of the federal government’s rescue of the auto industry, presidential candidates are campaigning in a state that took a huge hit in the recession but has since rallied to post one of the strongest recoveries of any place in the nation.

Michigan is ground zero for the ferment in U.S. manufacturing, the sector that has done so much to power the recovery and a surge in overseas demand for American products.  The resilience of the auto industry has played a significant role.  American vehicle sales rose to 12.8 million in 2011.  The Big Three claimed 47 percent of market share, their best showing since 2008.

Ford earned $20 billion, its best earnings since 1998 and its second-biggest annual profit in the company’s 109-year history.  GM regained its position as the world’s largest-volume automaker and notched a record profit of $7.6 billion.  Chrysler rebounded from a $652 million loss in 2010 to post a $183 million profit last year, its first full year of positive earnings since 2005.

Even if manufacturing does not regain the outsized share of GDP and employment it once had, it remains powerful engine of innovation, a driver of exports that are taming our trade deficit, and a source of good-paying jobs.  Successful manufacturers, from giant auto companies to small machine shops, are pivoting to new lines of business like clean energy, adapting to new technology, and embracing a culture of continuous learning.

In states like Michigan leaders are looking to the future, one driven by innovation.  By contrast, our national politics is still stuck in the past.  Michigan’s GOP primary contest makes this all too clear.

When the leading GOP candidates talk about manufacturing in Michigan, they are usually squabbling over the wisdom of the auto industry bailout.  This argument over counterfactuals (would the industry have bounced back without the bailout?  How fast?) misses the point - what will the candidates do to make sure that American manufacturing stays strong?

When they do get around to answering that question, Governor Romney and Senator Santorum put forward proposals that show they are only partly listening to what the makers and innovators really need now.

In a speech last week to the Detroit Economic Club, Senator Santorum pledged to eliminate taxes on manufacturers and allow companies to repatriate profits tax free if they invest that money in plants and equipment.  He also promised a 20%, permanent R&D tax credit.  Governor Romney followed essentially the same script at his own DEC speech this past Friday, although he alluded to the need for greater private-sector investment and the importance of our institutions of higher learning. But, fundamentally, the focus of both candidates’ announced plans is on lowering taxes.

Certainly, manufacturers are very happy to pay lower taxes and welcome more support for research.  But 21st century manufacturing needs a lot more to flourish - and some of that has to come from government.

At a forum on innovation in Washington earlier this month, the chief executives of GE, Dow Chemical and Boeing mentioned tax policy, but they also pointed out the importance of immigration, education (especially in science, technology, engineering and math), attracting foreign direct investment, and the cut-and-invest policies in the deficit commission report.  They also stressed the importance of learning from Germany and its interplay of universities, research centers, firms, and workers.

The federal government should be asking the important questions:  What do companies and workers need to flourish in an economy driven by production and exports?  What are the market gaps in providing capital, or applied innovation, or worker training?  How can federal policies galvanize the talents of states and metros where industries are located?

Manufacturers know you can’t get into overdrive if you’re stuck in reverse.   As Governor Romney and Senator Santorum travel through Michigan and other states, they should focus on what matters to the people who are driving the recovery and explain how they will deliver.  They should aspire to collect ideas, not just delegates.

The views expressed in this article are solely those of Bruce Katz and Jennifer Bradley.

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soundoff (191 Responses)
  1. jansue

    Very well thought out artical, but you left out that there is a Dr. running for president who is schooled in Austrian economics which is the most proserpous in the world.
    Ron Paul for President..

    February 25, 2012 at 1:16 pm | Reply
    • RINOVT

      The problem with looking to Austrian Economics is that Austria spends zero on defense and we spend more than the next 25 countries put together.

      February 25, 2012 at 3:40 pm | Reply
  2. bird

    All these companies keep asking for and getting tax breaks, but prices for their good never go down. Wages do not go up. They make record profits, and 'We The People" get hammered, and then stuck with bailing them out when they screw up. If the Gov't is going to offer business 20% tax credit, offer that to the citizens as well, or tell these businesses they can have a 20% tax credit, for a 20% reduction in their prices. Think they would take that deal??????

    February 25, 2012 at 1:26 pm | Reply
    • Debby

      I'll say especially GM prices.

      February 25, 2012 at 2:52 pm | Reply
  3. J in DC

    The only way to fix the political system is to try to get the money out of it. How about just limiting each individual to $2,500? Corporations are NOT people. This shouldn't be debatable. The super PACS have to go as well. How is it right that one person (Sheldon Adelson for example and many more) can donate $10 million? To say that these super PACS aren't "for a particular candidate" is an outright lie. The system is broken. As they say, follow the money. It's really that simple. If only it were that easy to ween people off of money....

    February 25, 2012 at 1:29 pm | Reply
  4. Sirned

    So how far can profit go up for companies in a free market? Where's the limit? We know companies rig the prices so they are all about the same price. The cost for the average prescription has a 900% profit margin...How much longer can we be expected to pay these kind of prices before we are selling our wedding rings to pay for the necesities ? The GOP is on the side of the hugely profitable companies. They are no friend to working Americans.

    February 25, 2012 at 2:27 pm | Reply
  5. Mark

    Clinton had a surplus because he authorized (mandated) subprime loans which artificially boosted the economy just like the dot con craze.... But both of those popped when GW was in office.... All Bush's fault though... Lmfao you hypocritical simpletons are funny

    February 25, 2012 at 3:39 pm | Reply
    • acbytesla

      Wow, Mark you really don't know what your talking about do you?

      Certainly Clinton made mistakes that helped to create the housing mess of 2008 and the fallout that resulted. But this had little or nothing to do with either Clinton’s budget surpluses his administration or the skyrocketing deficits under Bush’s.

      What you are referring to is the Banking Modernization Act and the Commodities Modernization Act. This was legislation that was passed in 1999 and didn't take effect until the middle of 2000. I don't see how it’s possible that they effected any of Clinton’s budget surpluses or Bush’s deficits except for maybe the year 2008. It was not until 2007 that a significant number of loan defaults began to surface.

      It's also important to recognize that both of these bills were passed over the objections of a majority of Democrats. Both bills were sponsored by Republican Phil Gram and were passed with almost Republican unanimity with only a minority of Democrats voting yea. Never the less, Clinton was all on board and Bush was fully supportive of both of these bills and had no intention of reversing either of them.

      I agree with you Bush was not totally responsible for the housing mess. But you could easily say that Bush administration was grossly irresponsible.(Not necessarily him individually) You see Bush was all on board and had at least 6 years with a Republican Congress to do something about the developing problem.

      Perhaps if Bush administration wasn’t waging two needless wars they could have given our economy the attention that it required. Perhaps Bush could have been monitoring and resolved problems with banking and housing before they got out of hand.

      You could easily say that Clinton bears some responsibility for the deficits that Obama is accruing the last few years though. But to say that Bush and the GOP is not far more responsible for the housing and banking collapse is both blind and wrong.

      It’s because of the housing and banking collapse that a huge segment of the American economy imploded in 2008 and has only seen glimmers of recovery since.

      You know I’m tired of the blame game. It gets us nowhere. I’m blaming the policies and problems and want to address them.

      The housing bubble was caused by those two pieces of legislation and others as well as the Fed that allowed the banks to loan money with little concern of repayment. It was caused by mortgage securitization and Credit Default Swaps that insured these securities with no backing at all.

      ARMs, Zero Down, zero interest loans that while appealing to ignorant and trusting middle Americans were really con jobs that eventually would demolish them.

      I think Bush’s administration will be viewed in 50 years to be as bad as Hoovers was. Even today, virtually all of the Republicans running for President are running away from W’s policies.

      But you know what Mark? That doesn’t matter, Which President was better or worse. We must as a group, liberal and conservative, progressives and moderates, Democrats and Republicans stop and address the problems together.

      February 25, 2012 at 6:16 pm | Reply
      • Mark

        acbystesla.... I was posting that as a response for those who blame Bush for the economy. It's a farce.

        And we were in the Iraq war only for Israel... Need I remind your ignorant a$$ how many Democrats voted for the war in Afghanistan?

        You're hilarious... you say "lets move forward" but you're the same type of d-bag that will take every chance to blame Bush and absolve your President (not mine... hehe it's fun to do what Dems used to do) of responsibility.

        Oh.... To move away from the subprimes set up by Clinton was political suicide for anyone... Don't blame Bush you jacka$$, take responsibility that your commie liberal ideas "everyone should have a home" didn't work out

        February 25, 2012 at 9:11 pm |
  6. HandOutSociety

    The down and out in Michigan only have themselves to blame for their problems. Education, self drive are the answer. Some of the problem is that the folks up there don't know they can leave. Detroit is a precursor to what other cities will become soon if the O man continues in the office he has made a joke.

    February 25, 2012 at 3:49 pm | Reply
  7. HandOutSociety

    The rich got rich by their hard work, taking chances and risks that the bulk of the sheep out there would never contemplate. Stop the balling and get a job, stop sucking the tax dollars losers.

    February 25, 2012 at 3:51 pm | Reply
    • Mr Realist

      Plenty of rich people got there by inheriting it, or by good luck in choosing their parents. You think your description applies to George W. Bush? He got rich via family connections. "Born on third and thinks he hit a triple" is a good description of that type.

      February 25, 2012 at 5:29 pm | Reply
    • BMW57

      Sorry but the facts do not back you up. The greatest factor that correlates wit wealth is being born into it. Most of the top 1% mae their money the old fashoned way, they inherited it. People want to work but for a fair wage that allows them to enjoy life not the lowest wage a "job creator" can get away with.

      February 26, 2012 at 1:01 am | Reply
  8. Damikco

    Just face it the GOP is a dying brand that has lost most of its control of the other 99% of the population.

    February 25, 2012 at 3:52 pm | Reply
  9. Mark

    Bailing out auto industries wasn't helping big business?

    February 25, 2012 at 3:54 pm | Reply
    • BMW57

      Yes it did help big business but it helped over a million workers as well at the auto companies and their supply chain.

      February 26, 2012 at 1:02 am | Reply
  10. Bob

    It's worth noting that all the candidates are willing to bend over backwards to help big corporations. However, the people who are in trouble are the workers, not the stockholders and top management. Not a word has been said about what the candidates will do to restore the wages and benefits they lost as part of the bailout, or what will be done to increase wages in the future. The candidates all plan to give continued tax breaks to corporations and the rich, but say that in order to do that and still balance the budget they will have to take away government assistance from people who are not earning enough to get by on because wages are so low or are currently out of work. Fortunately, there are a lot more people in Michigan who fall into this category than there are people who will benefit from giving more tax breaks to the rich. Let's hope they all show up on election day.

    February 25, 2012 at 4:38 pm | Reply
  11. acbytesla

    It's amazing these posts.... Rich vs Poor.

    Always the same moronic posts. It really doesn't matter, because somebody will always be rich and somebody will always be poor.

    But what's amazing these posters that defend continued tax cuts that will 99% benefit the wealth while at the same time demanding spending cuts that will hurt the poor and middle class as well as the country as a whole.

    Did any of you whiners actually read the column? Katz and Bradley were proposing that instead of focusing on necessarily of the fairness of the tax code, that we focus on the country's problems and address them specifically.

    But the response from the Peanut class warfare.

    This is the big problem with the GOP today, it has ONLY THREE IDEAS at all for solving the country's woes. And they are the same ideas that they have been touting for the last 20 years.
    1.Cut taxes on the rich.
    2. Cut government spending, but only in infrastructure spending and the safety nets for the poor and working class, (never on the military or on the national security apparatus)
    3. Cut all regulations that safeguard the environment.

    While these ideas will certainly benefit the rich in the short term. However in the long run, they are far more likely to drive the nation deeper into debt, help further destroy an already crumbing infrastructure, create millions more homeless, hurt our children's education and futures and eventually hurt the wealthy as well.

    I'm all for what makes sense and what is best for the country's economy as a whole. If it benefits the rich but helps the rest of the country. So what? What's important isn't necessarily trying to make everything equal and fair. although that would be nice, but will never be, It's how do we make our country's economy robust with good jobs, that allow families a quality of life.

    I think it would be far fairer that the wealthy pay a substantially heavier tax burden. But frankly I care FAR MORE that America is great again, that our unemployment is low, that our children get quality educations and good employment opportunities. If that meant cutting their taxes to zero, I'd be all for it. But I simply don't buy the argument that cutting and cutting taxes ad infinitum addresses those problems.

    What is the definition of insanity? Doing the same thing over and over again and expecting a different outcome.
    Guess what has been the result of the Bush tax cuts that are still in effect? It's huge deficits and no benefits to the middle class. And what does the GOP want to do? Double down and cut taxes even lower. Insane!

    Argue that posters...

    February 25, 2012 at 4:49 pm | Reply
    • MK54

      The rich have been taking from everyone else througout history.....thats how they get rich and grow richer.

      February 25, 2012 at 5:00 pm | Reply
      • acbytesla

        What you say is true, but guess what? You can't stop there being rich people. Communism on a wide scale doesn't work. (It has however worked well in Kibbutzes in Israel)

        All you get from taking the rich and powerful down is make somebody else rich and powerful. Capitalism is flawed but the best system so far to advancing society. The problem is that society and the economy has evolved and Capitalism in it's pure Laissez Faire dog eat dog DOES not work any more for the betterment of all.

        It needs to evolve.

        February 25, 2012 at 7:24 pm |
    • BMW57

      At least one vote in agreement with you.

      February 26, 2012 at 1:05 am | Reply
  12. MK54

    "Corporations are people....Let the auto companies fail......I am not concerned with the poor.....I like to fire people". Thank you Mr. Romney for your honesty. Every now and then, it just slips out.

    February 25, 2012 at 4:55 pm | Reply
    • bullet

      Right on!

      February 25, 2012 at 11:46 pm | Reply
  13. Get With It

    Katz and Bradley are also "not getting it" when it comes to Michigan. This notion that we need to encourage immigration into Michigan in order to maintain our competative edge is a myth purpetuated by the academics and the economic club in this state, which have become way too cozy.

    Your average student or worker who pursues math or science in this state is being undercut by the rapid influx of foreign nationals into this state, where visas are being passed out like candy. Why? Because they can lure them in at a lower wage than they would have to pay an American and control the market with the lure of a visa. This is happening here, and all over this country, and we are literally undermining our own technological base. It is hypocrasy to encourage American students into math and science, and then give away there jobs to a foreign national because they "meet the cut" by being in science. Why aren't we giving our own scientists in this state a chance? We are going from outsourcing now into importing. This is just plain wrong.

    February 25, 2012 at 5:05 pm | Reply
    • acbytesla

      Get With It, you clearly don't know what your talking about in regards to immigration. Sure, it's probably not good to flood the country with poor uneducated immigrants. But educated wealthy immigrants only add to the economic strength of the country. Of course we could also help our economy if we did a much better job of educating our own people,

      But it would be stupid to shut the door on people like Einstein,Fermi, Tesla or any of the millions of highly educated people who have immigrated to the US. All they do is helping to make the US even greater.

      February 25, 2012 at 6:27 pm | Reply
  14. Aaron

    Romney understands how to raid a company, layoff its employees, strip and sell its assets, and make lots of money. Santorum knows how to have a loud public fit whenever a company offers contraceptive care under its insurance policies. The pickings are slim with those two.

    February 25, 2012 at 6:15 pm | Reply
  15. Frank

    Not good for manufacturing because the state manufacturing belt demonstrates Dem's don't get it either. The only difference between the two parties when it comes to manufacturing are which ones they want to subsidize. If Michigan wants manufacturing back, its pretty simple, just do the opposite of what it did in the past.

    February 25, 2012 at 6:18 pm | Reply
  16. spentecost

    It's true they do't get Michigan, but why not include the entire country. This is the lamest bunch of numnuts in history, and that is a long list of numnuts. Every time that their mouths open more shizer is introduced into the atmosphere. The idea that the middle class is envious or jealous of Mittens or Santorum is laughable. Money makes the world go round,sure, but to disregard the opportunities life has to offer that do not pay in literal compensation that can be spent in the marketplace is just as wrong headed as can be. But what do you expect from no-serving war mongers who had the chance to really know the meaning of something bigger than themselves. And that is the emptiness of shallow, uncaring, bigoted hypocrites. Maybe I never made over 75 grand in a year. That translates into envy? Hell, as a regular Army private in 1971 I was making 128 bucks per month. I never gave a thought to the fact some ass could tell me 40 yrs. later that I would regret not evading duty. No way to explain the value of honorable service in war to Mittens and his crowd. If that is foolish then call me and millions like me what you may, just don't make it envy.

    February 25, 2012 at 6:56 pm | Reply
    • Debby

      Michigan isn't hard to figure out Detroit is a total dump.

      February 25, 2012 at 8:14 pm | Reply
  17. jdoe

    A lot of research that benefits private enterprise comes from public money, whether it's research in universities, reseach grants to private businesses, NASA or the dept. of defense. Private enterprise benefits from this free of charge. Some research simply will not be done by the private sector either or both because the investment is too big or because there is no immediate path to profit.

    Ironically many Americans and politiicians are clamoring for more cuts to research funding and public education. That's the exact opposite of what is needed to move this country forward.

    February 25, 2012 at 7:18 pm | Reply
    • acbytesla

      here here .... so so right.

      February 26, 2012 at 1:41 am | Reply
  18. 6speed

    As a Michigan resident, I have to laugh at how these guys become instant "auto industry experts" as they prepare to cross the state line.

    Romney only claims to be from Michigan when he is here. The people of this state know better, he happened to be born here, and then left. Period. Nobody here is fooled by his on/off claims to this state. He speaks using words like "we" and "our" when he's here, but everyone knows better.

    The view from most here is that, you supported the bank bailout, but not the auto industry loans? likely ain't getting the votes. Whether or not you agree with the auto industry loans and sponsored bankruptcies, they DID help to keep jobs here. And THAT is what people will remember when they go to the polls on Tuesday.

    Fact is, speaking as a former Republican (former thanks to GWB) and now independent, I can tell you that this is the weakest and most embarrassing Republican field since 1996.

    I would like to see Romney lose here for the simple fact that he refers to it as his "home state", as do the majority of media stories floating around. Unfortunately outside of Ron Paul, none of the other guys appeal to me either.

    Romney has proven that, out of the remaining four candidates, he is the MOST out-of-touch of all of them. Fact is they all likely are, however Romney seems to continue coming off that way the most. That is why even the "home state" campaign he's taken on will likely fail. Not thrilled with the likely beneficiary of that (Mr. "let me in your bedroom" Santorum), however Romney's arrogance and ignorance of the people of Michigan will likely be his downfall. Quite ironic, actually.

    February 25, 2012 at 7:40 pm | Reply
    • Debby

      First its not rocket science to figure out the auto industry. Second Romney moved away so what it was his hometown. Alot of us move away and come back to our hometowns. It doesn't mean he isn't in touch he grew up there.

      February 25, 2012 at 8:12 pm | Reply
      • Sarah

        If you haven't lived in an area for a few decades and don't know the situation as a whole, then yes you are out of touch.

        February 25, 2012 at 9:52 pm |
    • responder

      Could not agree with you more. All the republicans i know are NOT VOTING FOR ROMNEY...First off, his parents were DEMOCRATS..not republicans..and those that used to like his father in the past.... DO NOT LIKE HIS SON NOW. Second, ROMNEY IS A LOOSER and the people of Michigan are sick of backstabbing A HOLES...PERIOD..He lies..he wanted Detroit to just FAIL..well, we hope he fails because he is not for people he is for MONEY ...GREEDY A HOLE

      February 26, 2012 at 12:47 am | Reply
  19. AGuest9

    That's rich. Let's go to the Rust Belt and talk about immigration. Hello? How about an education plan that gets a primary focus on the math and sciences that our students are so sorely lacking in? I don't mean more grants to universities – let them raid their sports programs and put some of those millions into education. I mean the local K-12 schools. Why do we have out-of-work scientists and engineers in this country? Why aren't THEY teaching, rather than someone who graduated with a 2.5 cu.m?

    February 25, 2012 at 7:51 pm | Reply
  20. Siara Delyn

    Well, you know what they say. "D" is for drive, "R' is for reverse".

    February 25, 2012 at 8:46 pm | Reply
  21. James From Michigan

    I really never knew until recently what people meant when they called someone a "Rand-ian". As in Ann Rand. As in Atlas Shrugged. I think it was in 2008 when John McCain was running for president and I could clearly hear him say at one point, "the jobs aren't coming back to Detroit, they just aren't coming back". I was like what the heck is he talking about, they are not coming back?" Coming from Michigan, that was a huge smack in the face. So, I had to look into exactly "why" they were not coming back. And what I ran into was not good news. The book which I spoke of earlier was eerily coming true it seemed. And then you have all of these celebrities and executives "retiring" this year. I mean, what the hell? Where the hell you goin' Oprah and Barbara Walters? I just cannot believe that the people who are directing these huge corporations did not say, "No, we have this market, and we have these resources, and we are going to keep this lead in this industry no matter what!" Come on, this crap is planned from the get people. They want to empty out our great state of Michigan with Agenda 21. O, don't know what that is, that's the United Nations answer to too many people and don't let the door hit ya when you get out. They want to protect Mother Nature more than the want to protect me and you. Imagine that? So if Ron Paul is not elected this year, we are all going to be run by a Fascist Dictatorship. Remember that all you yuppies in November. Please send all hate mail to the president, he seems to be able to deal with it swimmingly.

    February 25, 2012 at 9:06 pm | Reply
  22. Sarah

    Ron Paul's speech at Central Michigan University tonight sure was popular, completely packed with enthusiastic supporters and many more listening outside because there were no more seats. CNN probably won't mention that though, or any of Ron Paul's other four upcoming events in Michigan.

    February 26, 2012 at 2:24 am | Reply
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